Shares of major mining companies, including Tata Steel Ltd., MOIL Ltd., and NMDC Ltd fell up to 5% in early trade on Wednesday following a Supreme Court ruling related to state taxes and royalties on minerals.
The court’s decision allowed states to collect past dues in the form of tax and royalty from April 2005. This ruling caused a notable drop in the stock prices of these mining companies.
In a blow to mining operators, the Supreme Court has permitted states to recover outstanding royalty payments on mineral-bearing land from both the Centre and mining companies starting from April 1, 2005.
This ruling was made during the delivery of a judgment by Chief Justice of India (CJI) DY Chandrachud, who was addressing whether the court’s July 25 ruling, which affirmed the states’ authority to impose taxes on mineral rights and mineral-bearing land, would be applied retroactively or only prospectively.
The Supreme Court, led by Chief Justice DY Chandrachud, said that states can demand these payments in instalments over the next 12 years, starting from April 1, 2026. However, the court turned down the request from the Mineral Area Development Authority to apply these charges on a prospective basis, meaning future demands won’t be adjusted.
Among the affected stocks, Tata Steel was hit the hardest. Its shares fell by more than 3.6% to reach the lowest point of the day. Tata Steel had previously set aside Rs 17,300 crore as a potential liability for claims from the state of Odisha if these claims were made retroactively.
Hindalco’s management stated in a post-earnings interaction with CNBC-TV18 that the company would not be impacted by the retrospective claims, as it does not have any pending claims from states.
Tata Steel’s shares were down 3.1% at Rs 144.23. NMDC shares fell 4.45% to Rs 214.48 while MOIL’s shares decreased by 3.78% to Rs 407.75. GMDC also saw a decline, with its shares trading 1.03% lower at Rs 358.60 after earlier highs.
The Supreme Court’s decision has clearly had a significant impact on these mining companies, leading to a broad sell-off in their shares.
